Duplex, partnership, taxes - Posted by AJ

Posted by Armando Verea on March 14, 2002 at 20:22:58:


Could you email me copies of your partnership agreements. Thank You.

Duplex, partnership, taxes - Posted by AJ

Posted by AJ on November 17, 2001 at 11:33:18:

I recently purchased a duplex in Oklahoma as a 50/50 partnership with a friend. I expect that we will break even on actual cash flow but taxable income will most likely be negative due to depreciation expense.

Because I do not work in the United States, I will be unable to offset my income with this loss (I think). However, my partner could use the tax benefit to offset his income.

QUESTIONS: In the event that we show a taxable loss, is it possible (i.e. within the bounds of the law) for my partner to file his tax returns as if he owned 100% of the property and therefore reap the tax benefit for the full loss. And what would be the downside implications of doing this?

Secondly, if this is possible, is there an established business/partnership etiquette that specifies how to divide the full tax benefit that he captures by “crediting” me for the fact that he was able to reap a benefit for “my half” of the property?

Many thanks,

Write up a partnership agreement - Posted by John J.

Posted by John J. on November 18, 2001 at 08:26:11:

I have invested with partners for 20 years, I strongly recommend that you and your friend write up whatever it is that you agree to in a partnership agreement. I’ll be happy to email anyone a copy of one of my agreements, if you email me with a request.

Re: Duplex, partnership, taxes - Posted by JHyre in Ohio

Posted by JHyre in Ohio on November 18, 2001 at 07:40:54:

Making it look like your partner “owns” the whole thing is a bad idea. Partners do have a fair amount of leeway in allocating items of deduction and income, as long as some fairly involved “capital accounting” rules are followed. For example, you could allocate all of the depreciation to your partner in exchange for your taking a larger share of the tax gain on the property if/when sold. Special rules apply to foreigners in terms of withholding, etc. You want to get Publication 901 (US Tax Treaties) to see how your country treats/gets treated by the US. Several other publications are relevant to foreigners…check out the IRS website…its www.irs.gov, if I remember correctly…if not, email me and I’ll email the link.

John Hyre